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Planning for the Future of your Organization 

Planning and budgeting for future years can be difficult even in times of stability. With the COVID-19 pandemic and all of the other economic changes we’ve seen in 2020, planning for the future of your Organization might seem more daunting than ever. However, planning for the upcoming periods is likely more important than ever before.

Below are some things to think about as your Organization begins to budget and plan for 2021:

Determine your starting point: Organizations came into the pandemic with varying levels of liquidity, access to capital, and tolerance for risk. It’s important to take some time to determine what resources your Organization currently has to work with. Maybe it’s a previously un-accessed line of credit, investment options that can be shifted, or board designated net assets that might serve a better purpose than previously intended. With all of the changes we’ve seen over the last year, the idea is to think about available resources in a different way than your Organization did previously to maximize their benefits.

Analyze multiple scenarios: While budgets are usually fixed for the year, the COVID-19 pandemic has shown us that organizations will need to be more flexible than ever. With this in mind, it will be important to build in contingencies and options into budgets and forecasts. Organizations will need to take a close look at what hiring decisions are necessary, what expenditures can be delayed, and what projects are now more important than ever. It might be helpful to build out multiple budgets – one for the most likely set of circumstances, one with optimistic circumstances, and one for the worst-case scenario. This will give leaders and decision-makers a complete picture of the various scenarios your Organization might encounter in the next year.

Identify alternative revenue streams: Expanding your Organization’s revenue streams is a good way to shield against major economic changes like the ones we have seen in the last year. Take a close look at opportunities for your Organization to add some diversification to its revenue streams. This could include renting out space when you are not using it or modifying fundraising events to align with an online format. One source of funding for many not-for-profit organizations during COVID-19 has been Federal funds. While we might not see any more issuances of those kinds of funds, local and state grants can be another good source of funding for many not-for-profit organizations. While diversifying revenue can be beneficial, it is important to consider the costs associated with acquiring various types of revenue. It is always best to consult a tax advisor before branching out into new types of revenue to determine if there are potential tax implications to consider.

Determine your end goals: One of the best strategies for planning and budgeting is to think about what you ultimately want to achieve as an Organization and work backward from there. While many Organizations will say their goal is simply to “survive” the pandemic, it is important to analyze what survival looks like for you. Survival might mean your doors stay open or it might mean you emerge from this with considerable savings to be more prepared for the next economic crisis. Whatever your Organization’s priorities may be, take some time during your planning process to determine what short-term and long-term goals your Organization has for the upcoming year.

After you’ve considered all of these things, remember, no budgeting process is perfect, so perfection should not be the goal. Instead, think of the budget as your Organization’s guide to achieving its key goals for the next fiscal year so that it is positioned to come out positive on the other side.

If you have any questions regarding this information, or any other issue affecting your Not-for-Profit organization, please contact your Blue & Co. advisor.

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